435 posts categorized "Policy"

August 28, 2014

On August 25, the Federal Transit Administration (FTA) released its final Guidance on Joint Development (FTA Circular 7050.1). Joint development is a subset of transit-oriented development (TOD) that generally occurs when a project sponsor (often a transit agency) partners with the private sector (or other public agencies) to develop on transit agency land in which there is a federal financial interest. Such projects often include residential or commercial developments. This release is the culmination of a public comment process which began in early 2013 (see Enterprise’s previous comment letter on joint development). The final guidance includes changes to the rules and procedures that could have an impact on the ability of project sponsors to incorporate affordable housing into these types of projects. Most notably, a new “fair share of revenue” standard must be met, which increases the emphasis on revenue generation and value capture as an outcome of joint development. Revenue earned from the lease or sale of land can be used to support the public transportation system as government funding sources come under pressure.

August 21, 2014

By Andrew Jakabovics, Senior Director, Policy Development and Research; and Allison Charette, Research Analyst

Earlier today, Bank of America reached a record-setting $16.65 billion settlement agreement with the Department of Justice (DOJ) and six states’ attorneys general regarding residential mortgage-backed securities sold in the lead-up to the housing crisis. This deal follows settlement agreements made with Citigroup (Citi) last month and JPMorgan Chase (Chase) last year, as well as the National Mortgage Settlement (NMS) made in 2012. Similar to these previous agreements, in addition to paying fines and penalties to the government, Bank of America is obligated to assist struggling borrowers and communities through various consumer relief activities. Under the terms of the agreement, the bank’s creditable activities must total at least $7 billion and be completed by August 31, 2018 (see below for comparisons of the four settlements).

Similar in most respects to the Citi settlement reached in July, the consumer relief agreement of the Bank of America settlement is far more nuanced than those of Chase or the NMS. It prioritizes the most effective strategies in modifying loans to best assist struggling borrowers and adopts best practices in stabilizing communities. It also requires the bank to make financing available for the preservation and construction of affordable multifamily rental developments at a time in which the need for affordable rentals is growing.

This settlement requires deeper principal reductions than previous settlements, mandating that the bank reduce principal to no more than 75 percent loan-to-value (LTV) for their portfolio loans, coupled with a 2 percent permanent interest rate cap, and no more than 100 percent LTV for investor-owned properties. There are also increased incentives for deeper mods and credit for investor payments. The community reinvestment and neighborhood stabilization provisions have also been strengthened, eliminating credit for so-called “bank walkaways” by stipulating that credit is offered for lien releases only when the property is occupied. Under the Chase and Citi settlements, banks could get credit even if they stopped foreclosure on abandoned properties that fall into limbo and are often a source of blight on communities.

There are some additional differences between this settlement and the Citi settlement. They include:

Bank of America receives a 15 percent incentive credit for completed modifications in Hardest Hit Areas beyond the requirement that half of all credit for modifications come from those areas

A 50 percent enhanced early incentive credit for first-lien principal reductions completed by May 31, 2015 (in addition to the standard 15percent credit for all activities offered or completed by Aug. 31, 2015)

Anti-blight activities include donations to nonprofits to facilitate reduction, rehabilitation or maintenance of abandoned and uninhabitable residential properties donated

Affordable rental housing minimum obligation reduced to $100M from Citi’s $180M, including $35.7M dedicated to lending in New York

Any funds not spent before Aug. 31, 2018 go to NeighborWorks (25 percent) and to state-based Interest on Lawyers’ Trust Account (IOLTA) organizations or other intermediaries that provide funds to legal aid organizations

Notably, until the Mortgage Forgiveness Debt Relief Act is reinstated, the bank must establish a fund for tax payments on consumer relief for homeowners. The fund will offset tax liability that consumers would incur when principal is forgiven. Under current law, debt forgiveness is treated as a taxable event with the amount forgiven considered as income. Without the offsetting payment, most borrowers given mortgage assistance would be hit with a significant tax bill as a result. Money paid into the fund does not count toward the bank’s $7 billion obligation for consumer relief.

August 11, 2014

By Diane Yentel and Emily Cadik

The congressional recess that lasts through August and until September 8 provides an opportunity to show members of Congress returning to their home states and districts what kind of impact affordable housing and community development programs like the Low-Income Housing Tax Credit (Housing Credit) and New Markets Tax Credit (NMTC) have had in their communities. At the same time, there are a number of pieces of legislation that impact these programs that advocates should be prepared to discuss with members and their staff to increase their odds of passage when Congress returns.

July 23, 2014

A daily roundup of news impacting housing and communities

By Allison Charette, Research Analyst

Programming Note: Community Developments on the blog will be on a short hiatus. The blog will return with a brand new look – stay tuned, and we will keep sending out the latest via email. Not receiving the Community Developments daily email yet? Sign up here.

Between 1990 and 2012, the national child poverty rate increased from 18 percent to 22 percent, says The Annie E. Casey Foundation’s latest KIDS COUNT Data Book. In addition, the percentage of children living in single-family households has risen from 25 percent to 35 percent while 13 percent of children are now growing up in high-poverty areas. Despite these increases, there have been improvements in the number of children attending preschool and the teen birth rate is at a historic low. (The Annie E. Casey Foundation, July 22)

July 22, 2014

A daily roundup of news impacting housing and communities

By Allison Charette, Research Analyst

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In her ongoing analysis of HUD’s recently released data on recipients of federal housing assistance, Lisa Sturtevant from the National Housing Conference (NHC) looks at household characteristics. Of the 5.2 million households, 39 percent are families with children, 33 percent are senior citizens, and 34 percent are non-senior disabled individuals. In addition, three-quarters of participating households are extremely low-income. (NHC Open House Blog, July 18)

July 21, 2014

A daily roundup of news impacting housing and communities

By Allison Charette, Research Analyst

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In an analysis of metropolitan cost of living data, or Regional Price Parities (RPP), Richard Florida and José Lobo of Arizona State University find that rent costs are the biggest drivers of regional differences in living costs. When comparing metropolitan regions across the country, the cost of goods is not nearly as varied as the cost of rent. While 80 percent of metro areas fall within five percent of the national average for goods, only one-third of metro areas fall within five percent of the national average for rent. (The Atlantic City Lab, July 21)